The reported restructuring proposal reflects the increasing use of Part 26A rescue procedures by restaurant and leisure businesses
Recent reporting indicates that Las Iguanas is seeking to restructure liabilities reportedly said to total approximately £37 million through a restructuring plan under Part 26A of the Companies Act 2006.
According to the reporting, the proposal is expected to involve lease renegotiations and compromises affecting landlords as the business attempts to stabilise operations and avoid a more serious insolvency outcome.
While the restructuring remains subject to the formal court and creditor approval process, the case reflects broader financial pressures continuing across the hospitality and casual dining sectors. Rising operational costs, changing consumer behaviour and substantial property liabilities have left many businesses seeking formal restructuring solutions outside traditional insolvency procedures.
The case is also another example of how restructuring plans are increasingly being used to preserve trading operations while reducing liabilities and renegotiating creditor obligations.
Why are hospitality businesses continuing to face financial pressure?
Many restaurant and leisure businesses continue to operate within difficult trading conditions despite wider economic recovery in other sectors.
Hospitality operators often face a combination of
- rising wage costs,
- increased food and energy prices,
- reduced discretionary consumer spending and
- significant property commitments.
Businesses with large lease portfolios can become particularly exposed where trading performance varies significantly between locations.
The sector also remains heavily dependent on footfall and consumer confidence. Even relatively modest reductions in trading activity can place substantial pressure on cashflow where fixed property and staffing costs remain high.
For some businesses, restructuring liabilities may become necessary to preserve viable parts of the operation before financial pressure escalates further.
What is a Part 26A restructuring plan?
A restructuring plan is a court-supervised rescue mechanism introduced through the Corporate Insolvency and Governance Act 2020 under Part 26A of the Companies Act 2006.
The process is designed to help companies experiencing financial difficulties compromise debts and restructure liabilities while continuing to trade.
- Unlike administration, a restructuring plan does not necessarily involve insolvency practitioners taking control of the business. Directors often remain involved in operating the company while negotiations continue with creditors under court supervision.
- One of the most significant aspects of the restructuring plan regime is the court’s ability, in certain circumstances, to approve a plan even where one or more creditor classes vote against it. This mechanism, commonly known as a cross-class cram down, has become particularly important in retail and hospitality restructurings where landlords, lenders and suppliers may have conflicting commercial interests.
FWJ regularly advises businesses, directors and creditors involved in restructuring, rescue and insolvency matters across England and Wales.
Why are landlords often central to hospitality restructurings?
Commercial property liabilities frequently sit at the centre of hospitality sector restructurings.
Many restaurant groups expanded during periods of stronger consumer demand and lower financing costs. Long-term lease commitments that once appeared commercially sustainable can become difficult to maintain when trading conditions deteriorate.
As a result, restructuring plans commonly seek to reduce rental liabilities, renegotiate lease terms or exit underperforming sites altogether.
These proposals can create tension between businesses and landlords because the restructuring may significantly affect rental income and future property values. The court therefore plays an important supervisory role in assessing whether the proposed compromises are fair to affected creditor groups.
Commercial property disputes and restructuring issues have consequently become increasingly interconnected within the hospitality sector.
FWJ’s expert Company Rescue team advises landlords, businesses and directors involved in commercial property disputes and restructuring negotiations and has been doing so for nearly 25 years..
How do restructuring plans differ from administration?
Administration is a formal insolvency process in which insolvency practitioners take control of the business with the aim of rescuing the company or achieving a better result for creditors than immediate liquidation.
A restructuring plan is usually intended to avoid that stage entirely. The process attempts to stabilise the business before formal insolvency becomes unavoidable.
For many hospitality businesses, avoiding administration can be commercially important. Administration may create reputational damage, disrupt supplier relationships and affect customer confidence at a particularly sensitive stage.
Restructuring plans therefore provide an alternative mechanism that may allow businesses to preserve operations while addressing unsustainable liabilities through negotiated creditor compromises.
However, the process can still become heavily contested where creditors disagree about the fairness of the proposed restructuring or the likely alternative outcome if the plan fails.
What practical lessons emerge from cases like this?
The continuing use of restructuring plans within hospitality demonstrates that many businesses are still operating under significant financial pressure despite wider economic stability in some areas of the economy.
For directors, early engagement with financial difficulties is often critical. The earlier restructuring advice is obtained, the more options are typically available before liquidity pressure becomes acute.
For landlords and creditors, understanding how restructuring plans operate has also become increasingly important because the process can materially affect enforcement rights, lease recoveries and negotiating leverage.
The wider hospitality sector is likely to continue seeing restructuring activity where businesses seek to reduce liabilities while preserving viable trading operations.
FWJ advises businesses, directors, landlords and creditors on restructuring plans, insolvency procedures and commercial disputes across England and Wales.
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